Webuye, October 2015
Almost 6 months into Customer Validation
It’s been almost 6 months since we launched test selling of our products and services in Kenya and it’s time to share some learnings. Why 6 months and not 4 or 13 and a half? Yes, 6 is a bit of a vanity metric but for now it just feels like it is a good time to make a quick recap of where we’re at.
What have we achieved so far?
In May 2015, we based ourselves in a local hotel in Webuye in Western Kenya (the office came later) and hired two sales agents to test-sell our MVP* (see next post for more details on the MVP) to earlyvangelists.
First, we spend some time with the sales people that we just hired to explain their job wasn’t sales but to learn from our clients. With this mission and some paper-based tools to collect data our agents approached the few earlyvangelists identified during Customer Discovery and started selling. Customer Validation was official launched.
Our sales process was very simple because we did not know much about our target customers:
- Approach earlyvangelists identified previously
- Convince them to form a group of people who would all buy the same product with the same conditions (we sell everything on payment plans)
- Execute the sale, deliver the goods, educate the end users and install the solar systems
- Wait for referrals and word of mouth effect
What did we achieve with this minimalistic approach?
Since vanity metrics have been already mentioned, let’s disclose some. We have sold around 300 units to about 300 clients over this period of time. Is this a lot or a little? We don’t know and it does not matter. What matters is the pattern of sales over the 6 months and the learnings.
From month 1 to month 5, we achieved almost exactly the same number of sales per week consistently, about 10 clients served per week. And then in month 6 we almost doubled our numbers. Why? Because we did not just sit and wait, we carefully followed each group of clients, especially the leaders of the groups.
We learned about the role of the leaders in their communities, how they go about recruiting members for their groups, which products are easier to sell (match problems better) and more about decision making in villages and at homes. With these learnings we refined our sales process and launched a more “visible” and systematic method to sell, hence the improved results in month 6.
Our archetypical client is not a person but a family and most often it is the women who sign the contract. They are virtually all small holder farmers but some are also teachers in local schools or husbands work in cities and send money home. Clients say they are very satisfied with having clean lights and being able to charge their phones at home. The stove, however, isn’t really solving the problems identified in the Customer Discovery phase.
The leaders of the groups are special people to us and we believe that it is thanks to them and the social cohesion of the groups that we have achieved 100% repayment rate. We also believe that they will be central for our engine of growth and therefore we are experimenting with cash and non-cash incentives plus some level of training to align interests. They are typically middle-age women who have strong links in their communities, are well respected, and of course are risk takers banking on us so early on.
What’s next?
We plan to continue testing our refined sales process over the coming months and we will monitor sales pattern and group leaders’ performance. We are also tweaking some of the MVP features by testing the introducing of new product ranges and also testing different ways clients can make their payments to us.
We don’t know how long it will take but the aim is to have a repeatable and scalable sales process before hiring any new sales staff.
Positioning our services and our company is a pending task. We operate in a very immature market with non-sophisticated consumers. Competition is difficult to define, there are NGOs, there are other start-ups, there are even banks offering similar services and products, but all are in their initial stages and all come in slightly different flavours. We will continue asking our clients and staff how they perceived Bidhaa Sasa in comparison to others, and this will hopefully help us to define a positioning strategy.
Some other news
We were lucky enough to benefit from free advice on pitching and presentation by expert David Becket. This was kindly organised by IBA Ventures, a fantastic platform for start-ups and investors looking to make positive impact in the toughest markets. Check out their blog post!
Bidhaa Sasa will also be speaking at the 2015 Lean Startup conference in November. Here their pre-conference interview with Rocio.
Lessons learned
- In validation the objective is learning not selling, and this is sometimes difficult to communicate internally and people not familiar with the Lean Start-up methodology
- One needs enough data to identify patterns on client behaviour but we are talking about hundreds not thousands, it’s feasible
- Test-selling in Validation is fun! But don’t forget your clients are early adopters and do not necessarily behave like the mass market.
Favourite Steve Blank’s Manifesto line: “Start-up metrics are different from existing companies”